One way to protect your organization from costly punitive damages awards in an employment discrimination case is to show that none of the key players did anything amounting to malicious or reckless disregard for the employee’s rights.
Avoiding such missteps is one of the main reasons you train managers and supervisors on the requirements of federal, state and local anti-discrimination laws.
Training, however, can only go so far. Sometimes, despite uncertainty about whether or not discrimination has occurred, you still may have to fire an employee. But what if you turn out to be wrong? Will that mean a huge punitive damages award?
Not if you can show that before the termination or other adverse employment decision was made, you consulted an attorney. That’s right: Calling in the lawyers is the best insurance—if you do it right. Here’s how.
First, make sure your attorney gets all the facts necessary to make an informed recommendation. Then get that recommendation in writing or be prepared to testify in detail about what you discussed and what recommendation counsel made.
Without those steps, calling an attorney offers no protection at all. And that’s a waste of legal fees.
Recent case: Norddeutsche Bank denied a promotion to Beverly Zakre, who was the sole breadwinner in her family. After she complained that she lost out on the promotion due to sex discrimination, the bank fired her. She sued.
A jury took her side and awarded her $1.3 million in lost wages and benefits, $100,000 for emotional distress and $2.5 million in punitive damages. The bank asked the court to toss out the punitive damages, arguing that it could not have acted in reckless disregard of Zakre’s employment rights because it had called its lawyers first to ask if it was legal to fire Zakre.
The court refused to eliminate the punitive damages altogether because the bank couldn’t (or wouldn’t) tell the court and the jury exactly what counsel’s advice had been. At best, the bank proved that it had shown a lawyer the termination documents and had discussed the case. But that wasn’t enough to get protection. Without the actual legal advice to review, the court couldn’t tell whether the bank acted recklessly or followed the advice. (Zakre v. Norddeutsche Landesbank Girozentrale, No. 03-Civ-257, SD NY, 2008)
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